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Sri Lanka.


The relations between Pakistan and Sri Lanka in commercial, economic and social fields established since independence have continued to grow steadily and played an important role in the economy of both countries.

The table showing the turnover and balance of trade indicates the positive trends of upward movement in foreign trade of both the countries for the past ten years. The trade turnover, which stood at Pak. Rs. 97.0 million during 1970-71, has increased upto Pak. Rs. 957.2 million during the year 1984-85 resulting in a drastic change of the trend of trade and brought the balance of trade in favour of Sri Lanka. Until the financial year 1984-85 Sri Lanka had enjoyed a favourable balance of trade showing a steady growth in the total turnover of the trade. Further Sri Lanka on her part increased her imports from Pakistan particularly rice and as a result Sri Lanka's tea and Pakistan's rice continued to dominate the trade between the two countries for some years.

In recent years however, in addition to rice, import of raw cotton, cotton yarn and fabrics, dried fish, onions, chillies etc. have figured prominently. In 1985, Sri Lanka started sustaining an unfavourable balance of trade with Pakistan due to a more than 100 per cent increase in her imports
 Trade Balance
Year Turnover of Trade
1979-80 824.3 - 61.5
1980-81 719.6 - 119.0
1981-82 81.5 - 189.1
1982-83 635.9 - 394.8
1983-84 618.3 - 153.5
1984-85 957.2 - 219.0
1985-86 1312.9 + 444.2
1986-87 1345.6 + 153.4
1987-88 2192.0 + 525.8
1988-89 2310.2 + 254.2

Notes: Value in Pak Rs. million + = Balance of trade in favour of Pakistan - = Balance of trade in favour of Sri Lanka from Pakistan. During the year 1987-88, as a result, the balance of trade recorded an unprecedented value of Pak. Rs. 525.8 million in favour of Pakistan. During the year 1988-89 the balance of trade remained unfavourable to Sri Lanka with the trade deficit amounting to Pak. Rs. 254.2 million in value. However the total turnover of trade has increased by 180 per cent or Pak. Rs. 1485.9 million during the past ten years showing an expansion of commodities traded between the two countries.

Major items imported from Sri Lanka to Pakistan are tea, natural rubber, copra, fresh coconut, betel leaves, ekels, coir-yarn, tamarind, arecanuts and spices accounting for more than 90% of the total imports from Sri Lanka. Import of tea from Sri Lanka during the year 1988/89 has been Pak Rs. 570 million or about 20% of order to boost the sale of Sri Lanka tea in Pakistan market, the government of Sri Lanka firstly established Ceylon Tea Bureau's office in Karachi in 1973 and also concluded a special trading arrangement in December-1987, which was terminated in December 1988.

With regard to the items exported from Pakistan to Sri Lanka, the total exports valued at Pak Rs. 65.2 million during the year - 1971-72 has risen upto Pak Rs. 1282.2 million in 1988-89. Major items of export to Sri Lanka are rice, dried fish, onions, chillies, cotton-yarn, fabrics, pharmaceutical items, sports ware, leather goods etc. Since Pakistanis are considered as one of her best trading partners and therefore Sri Lanka always procures her essential items like rice, onions, dried fish, spices, cotton etc., from Pakistan although there are alternative sources available.

Pakistan and Sri Lanka are traditionally good partners in foreign trade. Hence, both the governments have had meetings and discussion at various levels in trade and allied matters and delegations have been exchanged between the two countries for the purpose of achieving better results. For example, the first Trade Agreement between Sri Lanka and Pakistan was concluded in 1955. During the period 1967-1973 efforts were made to expand trade through arrangements like protocols at government's level and barter arrangements at State Agencies level as the Trade Agreement, which was signed in 1955 had not been able to gain good results in trade.

Further the Sri Lankan Joint Committee for Economic Cooperation was established in 1974 and held its second session in Islamabad in 1978 in order to expand trade and economic cooperation between the two countries. The 4th meeting of the above Joint Committee was held at Islamabad in August 1987. It has been useful in the expansion of bilateral trade, joint venture projects and technical co-operation between the two countries. The trade, and progress in the economic and social fields of the two countries will further expand under the newly established South Asia Association for Regional Co-operation (SAARC).

The attractive terms and services offered to foreign investors under the liberalised trade policy of Sri Lanka have also favoured trade development. It is a matter of satisfaction to mention that a few Pakistani businessmen have also invested in some projects in Free Trade Zones of Sri Lanka. Apart from the package of services and incentives provided to foreign investors by the Greater Colombo Economic Commission (GCEC) Sri Lanka has the advantage also of providing cheap skilled labour.

Furthermore the infrastructure connected with the trade between the two countries is also improving year by year. At present, there are 4 airlines with 6 flights per week operating between Karachi and Colombo. Many shipping lines, including Pakistan National Shipping Corporation and Ceylon Shipping Corporation, are also operating between the Karachi and Colombo Ports. This along with the container service facilities available at Karachi and Colombo Ports. This along with the container service facilities available at Karachi and Colombo Ports help stimulate the trade flow between Pakistan and Sri Lanka. It is appropriate to mention here that facilities for ship repairs are now available at Colombo dry docks. In addition, we have excellent five-star hotel accommodation available at very reasonable rates and natural scenic beauty of the Island of Paradise which attracts regular tourist traffic to our beautiful island.

Further, it is relevant to say that Sri Lanka and Pakistan are members of various international forums, including that of the newly-constituted South Asia Association for Regional Cooperation (SAARC), and therefore, trade between our two friendly countries has become an important issue under the newly-constituted form. There are more possibilities for further development of trade as well as other relevant matters between Pakistan and Sri Lanka as SAARC policies have reached the implementation stage end with an appreciation of the cooperation, goodwill and assistance received by us from the business community and government agencies in Pakistan.

PHOTO : Mr. R. Premadasa President of Sri Lanka

PHOTO : LIVESTOCK farming in Sri Lanka under the Anuradhapura Dry Zone Agriculture Project which was assisted by a Bank concessional loan of $ 15 million.
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Title Annotation:Pakistan's Trade Partners
Author:Kumararatna, D.S.
Publication:Economic Review
Date:Aug 1, 1990
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